Cotton rises on export demand, planted area

General Comments: Futures were higher again yesterday on more talk of strong export demand. Talk indicates that the buying was active over the weekend and has remained active early this week. Ideas of less planted area also supported Cotton futures again, but most of the talk was of the new demand. The current low new crop prices are bringing into question what farmers in Texas and the Delta and Southeast will plant this year. Some are wondering if planted area might be lower this year here in the US due to weak prices against competing crops. The area lost would go mostly to Corn and Soybeans. The plantings intentions report will be released at the end of the month. Texas areas should turn drier for the rest of the week. Delta and Southeast areas will see mostly dry weather.

Overnight News: The Delta and Southeast will see dry conditions. Temperatures will average mostly below normal this week and then near to above normal. Texas will get dry weather. Temperatures will average below normal today, but above normal starting Thursday until near normal temperatures come back on Sunday. The USDA spot price is now 81.46 ct/lb. ICE said that certified Cotton stocks are now 0.436 million bales, from 0.431 million yesterday. ICE said that 1 contract was delivered yesterday and that total deliveries for the month are 1,542 contracts. USDA said that net Upland Cotton export sales were 150,200 bales this year and 67,100 bales next year. Net Pima sales were 24,200 bales this year and 1,900 bales next year.

Chart Trends: Trends in Cotton are up with objectives of 89.00 May. Support is at 85.80, 85.20, and 84.00 May, with resistance of 87.50, 88.90, and 89.20 May.

FCOJ

General Comments: Futures closed a little lower as temperatures in Florida moved a little higher. It was a cold weekend in Florida, and frosts and freezes were possible over the weekend. Temperatures had been warm in the state until the weekend, and conditions are dry, and talk about the potential for more fruit drop and poor development of the crop for next year returned. Crop development is reported to be far enough along that some damage or loss is possible. Some buds could have been lost and that will mean less production potential for next year if the loss is confirmed. Traders also note that dry weather is stressing trees and could hurt overall production potential for next year. Harvest in Florida of mid and early oranges is almost over, and the Valencia harvest is underway. Bloom has been reported in groves in all production areas of the state. Brazil is seeing near to above normal temperatures and light showers and could use more rain. ICE said that 0 notices were posted against March contracts and that total deliveries for the month are 0 contracts.

About the Author

Jack Scovilleis a veteran futures market analyst specializing in grains, softs, rice, oilseeds, and tropical products such as coffee and sugar. His industry contacts in South America, Europe, Asia, and North America provide him with a unique and comprehensive view of these markets. Jack began working in the futures industry over 30 years ago and spent 10 years working on the floor of the Chicago Board of Trade in various roles, starting with The PRICE Futures Group since it was established in 1988. Jack writes daily commentaries - Morning Grains and Softs, in both English and Spanish and is regularly quoted around the world by news & wire services including Dow Jones, AP, Bloomberg, and Reuters. You can contact Jack by phone at (312) 264-4322 or by email at jscoville@pricegroup.com. Learn even more on our website at www.pricegroup.com.

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.